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Monthly GSM Subscriber Update - Sector Update




Kisan Ratilal Choksey Shares and Securities Private Limited


31 Oct 2013





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Monthly GSM Subscriber Update “Festive season supports healthy growth in subscriber addition…” TRAI has published GSM net addition for the month of September 2013 by each service provider in all the circles they operate. Subscriber addition picked up as festive season is around the corner and all telcos except MTNL have shown increase in subscriber base on MoM. The industry added 4.4mn subscribers, a growth of 0.7% over last month. Incumbents showed healthy subscriber addition of ~ 1.2mn subscribers each, indicating revival in subscriber addition. MTNL continued its declining trend while BSNL and Loop had flat subscriber addition. We believe the industry is consolidating at this point of time and the telecom players are skewed towards high ARPU and consistent subscribers than multisim and low revenue contributor subscribers. Bharti added 1.1mn subscribers taking total subscriber base to 193.3mn in September. Idea and Vodafone gained 1.2mn subscribers each. Aircel and Videocon continued uptick in subscriber addition with 0.6mn and 0.3mn subscriber addition respectively. We believe entry level tariff hike and partially removal of freebies have been discounted in earlier months and festive season has boosted subscriber addition in particular. Lower freebies at entry level and increase in voice charges per minute will drive up ARPU, giving higher ARPM for wireless players. Although the telecom ministry has rejected TRAI’s proposal to cut the spectrum price, we believe there might be a mid way out in order to get maximum participation in the spectrum auction. Competition has eased off to a large extent which has led to improvement in KPIs of incumbents. Growth in voice revenue and increasing revenue share of data segment will drive revenue growth for the incumbents. Healthy revenue growth across the circles Metros had a growth of 0.7% over last month. Delhi had the highest subscriber growth of 1.1% followed by Kolkata and Chennai each showing increase in subscriber base by 1.1% and 0.7% each. After last month’s healthy subscriber addition, Mumbai showed decline in subscriber base on MoM by -0.4%. A Circle grew by 0.9% while B circle showed growth of 0.4% MoM. C circle has come out with a better performance as compared to last month and grew by 0.6%. We believe penetration of data will increase in B and C circle, though with a lag effect and will give incremental revenue to wireless players. Videocon outperformed amongst the new players Videocon increased its subscriber base by 10.8% MoM and continued its winning streak amongst new players. Aircel and Uninor increased subscriber base by 1% and 0.3% respectively. BSNL and Loop mobile showed flat growth while MTNL had another disappointing month with 6% decline in subscriber base on MoM. In terms of market share, the pecking order remains unchanged. Bharti dominates in subscriber market share with ~ 28.5% followed by Vodafone ~ 23% and Idea ~18.7%. Our View Growth in subscriber addition is back on the track after dismal performance in last few months. Although TRAI’s proposal to cut the spectrum price has been rejected by the telecom ministry, we believe final decision would be taken considering failure in last to spectrum auction due to higher spectrum price. We expect telcos to report healthy growth in revenues on account of higher voice revenue led by increase in subscriber base and higher ARPU and robust growth in data segment.

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